Monthly Archives: February 2020

Berkshire Hathaway’s Brooks Sports Sues Clothier Brooks Brothers

(BRK.A), (BRK.B)

Berkshire Hathaway’s Brooks Sports, Inc., a footwear, apparel and accessories company headquartered in Seattle, has filed a lawsuit against Brooks Brothers Group, Inc. in federal court for breach of contract, unfair competition and trademark infringement.

The lawsuit seeks to stop Brooks Brothers from using Brooks’ famous BROOKS trademark on its stores and products and prevent public confusion and dilution of the BROOKS mark by Brooks Brothers.
Brooks also seeks damages for Brooks Brothers’ unfair competition and breach of contract.

The two companies have coexisted for more than 100 years without consumer confusion due to their distinct product lines and trademarks. Brooks is known for athletic-inspired innovative footwear, apparel and accessories under its famous BROOKS mark while Brooks Brothers makes ready-to-wear fashion apparel and tailored business and formal wear under its BROOKS BROTHERS mark. To support this distinction, there is a coexistence trademark agreement between Brooks and Brooks Brothers dating back to 1980.

Brooks Brothers recently attempted to block Brooks from obtaining registrations for its BROOKS trademark in the United States and other countries, despite decades of unopposed use. Additionally, on December 30, 2019, Brooks Brothers filed new trademark applications to use BROOKS alone, without the word BROTHERS, on eight categories of goods, including clothing, sporting goods and accessories for athletics. Brooks Brothers is also marketing “athletic” footwear and “sneakers,” which are among the items on which Brooks Brothers seeks to use the BROOKS trademarks.

“For more than 100 years we’ve built a brand that consumers worldwide recognize and trust,” said Jim Weber, Brooks CEO. “We will aggressively protect our intellectual property and defend the investment that’s created our valuable brand.”

© 2020 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

GEICO on Hiring Spree in Georgia

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GEICO’s Macon, Georgia regional office is looking to extend job offers to more than 500 Central Georgia residents in 2020.

There are full-time and part-time career opportunities in Claims, Salvage, Emergency Roadside Service, Customer Service and Sales. Recent college graduates and others looking to train for leadership positions are encouraged to apply for the Emerging Leaders Program or Management Development Program. No prior insurance experience is necessary; training, mentorship and support are provided to all new associates.

New associates will join Central Georgia’s largest private employer and GEICO’s largest regional operation. They will be welcomed onto a team with a proven track-record of success. Last year, nearly 40 percent of GEICO associates in Macon received promotions for their efforts to provide quality service to GEICO’s ever-growing policyholders.

GEICO associates are offered the Total Rewards Program, with a wide range of benefits, including a health benefits package, retirement and finance options and continuing education opportunities. In addition, associates can expect career growth opportunities and a friendly and supportive environment in which to develop and thrive.

GEICO also provides associates with many opportunities to be involved in their community. GEICO has been the biggest contributor to the United Way of Central Georgia for the past 14 years, and associates have been honored for their volunteer work at Bibb County Public Schools and Middle Georgia Community Food Bank.

© 2020 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

Berkshire Hathaway’s Precision Castparts Plans 737 Max Layoffs

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Berkshire Hathaway’s aerospace company Precision Castparts has given pink slips to 150 workers in Oregon.

The layoffs are due to the suspension production of Boeing’s 737 Max.

The company has positions across a broad swath of next-generation commercial platforms, including Boeing’s 737 MAX, 777X, 787, and Airbus’s A320neo and A350 XWB.

There is still no firm date on the resumption of production, however, the latest estimates stretch into the summer of 2020 with some deliveries running up to two years late.

© 2020 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

BYD to Build Electric Forklift Facility in California

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China’s BYD has committed to building a new California facility for its rapidly growing electric forklift business.

The company will construct a 50,000-square-foot facility in Rancho Dominguez that will include office space, warehouse space and facilities for demos and training.

“This expansion will help us build and strengthen our relationships and give us an important opportunity to showcase the variety of top-notch material handling equipment built by BYD,” Terry Rains, director of BYD’s North American forklift division, said in a statement. “BYD has been revolutionizing the material handing market and our extraordinary technology turns the industry inside-out,” added Rains.

Globally, BYD has delivered more than 12,000 zero-emission electric trucks across all classes, and it expansion into product handling equipment, such as forklifts, are part of a diversified electric powered product line that includes cars, delivery trucks, batteries, and even monorails.

BYD and Berkshire Hathaway

In 2008, Berkshire Hathaway bet on BYD’s potential, purchasing 225 million shares. It’s an investment that has paid off handsomely. Berkshire’s original investment of $230 million has grown in value almost ten-fold, and is now worth roughly $1.96 billion.

For More on BYD, read the Special Report: BYD, Berkshire’s Tesla.

© 2020 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

Susan Adzick Promoted to Chief Operating Officer of McLane Foodservice

(BRK.A), (BRK.B)

Berkshire Hathaway’s McLane Company, Inc., a leading supply chain services company providing grocery and foodservice solutions, announced that Susan Adzick has been promoted to executive vice president and chief operating officer of McLane Foodservice, and in July of this year, Adzick will transition to president of McLane Foodservice.

“Susan Adzick is an experienced supply chain industry executive who is well respected by all who know and work with her,” says Tom Zatina, current president of McLane Foodservice. “I have the utmost confidence in knowing Susan will be a steward of the values of our business and keep our company a great place to work, a great place to trade and a great place to invest.”

Since joining McLane Foodservice in 2000, Adzick has held various leadership positions including her most recent role as senior vice president of sales and strategic relationships, which she has held since 2018. She has worked to elevate the McLane Foodservice brand to higher visibility within the industry, grow market share with existing brands and add new customers in the casual dining and fast casual segments. Over the last few years, Adzick provided the strategic direction, business development and customer relationship management for the entire portfolio of McLane’s foodservice business.

Additionally, Adzick serves on the National Restaurant Association Board of Directors, National Restaurant Educational Foundation Board of Directors as vice chair, Restaurant Leadership Conference Advisory Council and served on the Women’s Foodservice Forum (WFF) Board of Directors as chair in 2018.

Prior to joining McLane Foodservice, Adzick worked with PepsiCo as vice president of operations before being promoted to senior vice president, national accounts. She holds a Bachelor of Science degree in Biomedical Engineering and MBA, both from Vanderbilt University.

“McLane Foodservice is positioned to support the supply chain needs of our strategic partners today and tomorrow,” says Adzick. “I’m excited about helping to further shape the future of our business.”

© 2020 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

Special Report: Berkshire Hathaway to Make $1.3 Billion on Sale of Newspapers to Lee Enterprises

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Berkshire Hathaway’s sale of its BH Media newspaper empire to Lee Enterprises will get Warren Buffett and Berkshire out of the newspaper business, and the good news it won’t be at a loss. Berkshire Hathaway will make a bundle on the deal.

Berkshire is selling BH Media Group’s publications and The Buffalo News for $140 million in cash, and providing approximately $576 million in long-term financing to Lee at a 9% annual rate.

What’s more, Lee Enterprises will lease also the existing newspapers’ facilities from Berkshire, including assuming the maintenance and upkeep costs, giving Berkshire an additional long term revenue stream.

Anyone that worries about Berkshire’s ability to collect on its loan can take comfort that the deal actually strengthens Lee’s balance sheet.

The proceeds Lee receives from the Berkshire financing will be used to pay for the acquisition, refinance Lee’s approximately $400 million of existing debt, and provide enough cash on Lee’s balance sheet to allow for the termination of Lee’s existing revolving credit facility. The financing requires no fees, will result in approximately $5 million of interest rate savings on Lee’s refinanced debt annually.

The transaction is expected to drive an 87% increase in revenue for Lee Enterprises, a 40% increase in adjusted EBITDA and immediately reduce leverage to 3.4x before synergies. Based on Lee’s work managing BHMG publications over the last 18 months, Lee expects $20-25 million of anticipated annual revenue and cost synergies. As a result, Lee will benefit from a stronger financial profile and be positioned to de-lever more rapidly.

Subsequent to the deal closing, Berkshire Hathaway will be Lee’s sole lender, putting Berkshire in first position in case of default.

The deal will reduce Lee’s leverage from 3.5x to 3.4x, before any cost and revenue synergies. Lee has identified approximately $20-25 million of highly achievable annual synergies, including revenue synergies from the management of digital advertising and subscriber programs, and cost synergies, primarily from the reduction of administrative expenses. Lee expects to achieve the full synergy run-rate within 24 months of closing, which is expected in mid-March 2020, subject to customary regulatory approvals.

Lee Enterprises is a longtime favorite of Warren Buffett, and it has moved in and out of his portfolio at various points. Lee has managed BHMG’s publications since July 2018 under a management agreement, and Buffett was clearly positioning Berkshire to get out of the newspaper business, no matter how much affection he had for ink stained paper.

A Windfall for Berkshire

In the end, Berkshire gets out of a declining business that had negligible impact on its balance sheet, can look forward to $1.296 billion in interest payments on its loan to Lee, and another $80 million in lease payments for the 10 years of its lease agreement. There could be significantly more if those leases renew.

How does Buffett feel about it? Buffett said, “My partner Charlie Munger and I have known and admired the Lee organization for over 40 years. They have delivered exceptional performance managing BH Media’s newspapers and continue to outpace the industry in digital market share and revenue. We had zero interest in selling the group to anyone else for one simple reason: We believe that Lee is best positioned to manage through the industry’s challenges. No organization is more committed to serving the vital role of high-quality local news, however delivered, as Lee. I am confident that our newspapers will be in the right hands going forward and I also am pleased to be deepening our long-term relationship with Lee through the financing agreement.”

Warren Buffett has built Berkshire Hathaway into a half-trillion-dollar conglomerate through acquisitions, but he’s not afraid to sell on occasion, especially when the deal means long term profits with no costs.

© 2020 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.